The impact of exchange rate uncertainty on the level of investment

Article Abstract:

Empirical evidence shows that an increase in price or foreign exchange rate uncertainty does not necessarily reduce investment levels. This can be gleaned from an analysis of varying degrees of uncertainty and price drift using a modified Dixit-Pindyck model. Increasing price or exchange rate uncertainty may or may not depress investment in certain situations, and there are threshold effects which can be used to determine whether rising volatility would increase or decrease investment. It is also possible to identify which types of industries would benefit or suffer from a move to fixed foreign exchange rates.

Administration of General Economic Programs, Foreign Exchange & Reserves Policy, Price Levels, Prices and rates, Investments, Foreign exchange, Foreign exchange rates, Pricing, Uncertainty, Foreign exchange market, Wage price policy

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Changing trends in international manufacturing productivity

Article Abstract:

A comparison of productivity growth rates of the US, Canada, Japan, Germany, France, Italy and the UK from 1965 to 1983 is accomplished through a stochastic trend based on the Kalman filter. This allows trends to change gradually according to the data, a feature lacking in previous studies. Results indicate that manufacturing productivity declined overall, although Germany and France exhibited the decline later. The gradual trend towards a common productivity level exhibited is consistent with the convergence hypothesis.

Analysis, Economic development, Labor productivity, Group of 7

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The macroeconomic effects of fiscal policy: linking an econometric model with theory

Article Abstract:

A method called 'theoretical deconstruction' is used to illustrate the macroeconomic effects of fiscal policy. The method involves the removal of theoretical complexities of an econometric model in relation to a reference theory. The model is then reformulated while considering the additional complexities that may affect its components until the model matches the reference theory. The method is applied in examining fiscal policy changes in England and an econometric model based on consumer optimization.

Public Finance Activities, Fiscal Policy, Models, Econometrics, Macroeconomics

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